Ofcom unveils plans to cap basic tier fibre prices

Many households’ broadband bills could fall over the next couple of years after Ofcom announced plans to cut prices for some services supplied over BT’s Openreach network.

The network is used by most UK telecoms providers, including TalkTalk, Sky and BT’s own real division, all of which are able to access services at the same wholesale prices as part of Ofcom’s requirement that customers have a choice of provider and benefit from competition.

Today the telecoms regulator unveiled proposals to introduce wholesale price cuts for entry-tier fibre connections which provide households with speeds of up to 40Mbps. It’s also requiring providers to pass on these cuts to customers.

The new prices caps would exclude faster up to 78Mbs connections and new products being designed by Openreach, including those using G.Fast technology which are expected to deliver significant speed boosts.

Ofcom says that by not capping these prices it will “encourage long-term investment in future ultrafast, full-fibre networks, while promoting competition and protecting consumers from high prices.”

“We’re making sure the market is delivering the best possible services for homes and business across the UK.”

Responding, an Openreach spokesperson said: “Ofcom have proposed a number of ways to address fibre pricing and service so we will be reviewing these in detail, but on first viewing they do not appear to incentivise more investment in ‘full fibre’ networks.

“The UK needs a regulatory framework that encourages investment and rewards risk. Building digital infrastructure is very expensive with long payback periods and we won’t recover our more than £3bn investment in fibre until after this charge control period.

“We want to invest in more ‘full fibre’ infrastructure, and we’ll be consulting with our CP customers to develop new business models and support to achieve that.”